Canadian Retailers Closing Amid Intense Competition, Failure To Adapt To Market

Canadian Retailers Closing Amid Intense Competition, Failure To Adapt To Market

1. Danier Leather stores liquidating as retailer starts winding down

2. Canadian fashion retailers face tough outlook, but luxury brands poised to do well

3. Smart Set stores set to vanish as part of Reitmans restructuring

4. Laura clothing chain files for creditor protection

5. Jacob to close all 92 stores

In fashion, everyone knows that you're only as good as your last season. But now, you also have to be fast and adaptable, which is something many Canadian retailers - like Danier Leather, Laura, Smart Set and Jacob - haven't been able to do. An influx of fast-fashion brands, combined with an inability to adapt to new styles and a growth in consumer choice, have led to the demise of many mid-price Canadian retailers.

Fast fashion changing the game

Says retail industry advisor, author and futurist, Doug Stephens, "A traditional apparel retailer might have taken months to go from the runway to a store. A retailer like Zara is accelerating that process. So they've really just changed the speed with which retailers need to get apparel to market." This speed allows these big retailers something traditional ones don't have: flexibility. They can get a new popular style onto the market in weeks or even days in some cases, according to Stephens. Traditional retailers just can't keep up. On top of that, spending habits are changing. Mid-market retailers don't have as much draw because, Stephens says, people are gravitating towards the extremes. Their new iPhone purchase is being supplemented by buying clothing at Forever 21. So these are the extremes of value," he says.

Lack of innovation

One of the main criticisms of Danier was that it didn't try to change until it was too late. It had a lock on the leather jacket market in Canada. But leather's popularity has grown "astronomically" over the last few years, say analysts. That popularity has brought cheaper alternatives and different styles onto the market. "It became less coats - it was more about blazers and outerwear that you can wear to work. And Danier just didn't grapple onto the trend," they say. And Danier was not particularly popular with the younger crowd, says Ed Strapagiel, a retail industry consultant. Even if they had tried to appeal to younger generations, their traditional image stuck with them. They had already ignored their current consumer base and stopped reinventing.

Infinite choice

Most shopping in Canada is still done in "brick-and-mortar" stores - only about 10% is done online. But that percentage is growing every year. Because of this, consumers now have more choice than ever. And many customers expect Amazon-style free shipping, so the retailers have to eat that cost. Strapagiel says online stores, while actually quite challenging and expensive to operate, have become a necessary cost of doing business. "But some of the smaller guys just can't afford to do that," he says. The recession is difficult to ignore too it's been like the final nail in the coffin, but not the main cause behind these brands' failures. Stephens doesn't think Canada has seen the end of this trend. "I think we're going to see more of this, and it's just a natural consequence of the retail category in Canada," he says. "They were just stuck in the middle of the polarising market and under intense competition."